The total volume of metallurgical coke produced by the 230 Chinese independent coking plants contributing to Mysteel’s survey increased for the fifth consecutive week during May 9-15, rising by 5,500 tonnes/day on week to average of 531,900 t/d, the latest survey results show. Better margins on selling coke encouraged the coke makers to boost production further this week, according to survey respondents.
The steady growth in coke production was a result of the better profits being made by the coke makers, sources said. Mysteel’s parallel survey conducted among a smaller sample of 30 merchant coke producers nationwide showed that as of May 16, the coke firms were making an average Yuan 102 ($14) margin on every tonne of met coke they sold, an increase of Yuan 18/tonne from the previous week.
The healthier margins stem from the fact that China’s independent met coke producers have successfully lifted coke prices four times so far this year, levering up coke prices by Yuan 400-440/t in total, as reported.
The good financial health of the domestic coke makers also reflects the firm demand for coke from steelmakers, also benefitting from a revival in their margins when selling finished steel, a Shanghai-based analyst said.
With the mills keeping their run-rates high, the daily average hot metal output among the 247 steel producers that Mysteel tracks had risen by 23,900 t/d to reach 2.37 million t/d during May 10-16.
The steady procurement of coke by domestic steelmakers is further evidenced by a significant decline in coke inventories at coke plants, Mysteel data shows. Over May 10-16, stocks of met coke held by the sampled 230 coke producers dropped by 58,000 tonnes or 12.8% on week to reach 395,500 tonnes, a new low since mid-September 2021, according to the latest survey.
Despite the steady demand for coke from steelmakers currently, some market sources are questioning how long that demand will stay firm, pointing out that some steelmakers have begun losing money once again. “It is now more likely that steel mills will press for reductions in coke prices if their profits continue to shrink to critical levels,” a Shanghai-based market analyst said.
As of May 16, China’s national composite coke price under Mysteel’s assessment was largely flat on week at Yuan 2,099.4/t including VAT, only up by Yuan 1.5/t on week.
Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.